Bitcoin plunged below $77,000 today following an announcement by US President Donald Trump of a staggering 104% tariff on Chinese imports. The move, which escalated already tense trade relations, has resulted in significant market volatility since the beginning of April.
The President’s tariff pronouncement triggered considerable instability across risk assets, including the S&P 500 and Nasdaq which saw sharp intraday gains of approximately 4%. However, these gains were short-lived, with both markets retreating and erasing most of their daily gains. Bitcoin was not immune to this volatility, initially soaring above $80,000 before plummeting to below $77,000.
Prior to the announcement of the tariff, President Trump engaged in talks with allies such as South Korea and Japan, momentarily inspiring a sense of market optimism. According to the White House, nearly 70 countries have reached out in hope of striking trade agreements. Trump hailed these discussions as a “beautiful and efficient” process.
However, in spite of these negotiations, the President confirmed that the hefty 104% tariffs on Chinese imports would proceed as planned, taking effect at 12:00 AM on April 9.
China reacted on Monday to Trump’s earlier tariff threat, defiantly pledging to “fight to the end” and dismissing what it referred to as “US blackmail.” This response signals a slim chance of compromise.
The economic repercussions of these tariffs have rejuvenated concerns about a potential slowdown. Goldman Sachs recently upped its forecast for a US recession to 45%, citing a tightening of financial conditions and escalating trade uncertainty.
In tandem, JPMorgan now anticipates the Federal Reserve to initiate a string of rate cuts starting in June 2025. These reductions will occur at each meeting with an additional cut in January, bringing the upper limit of the benchmark policy rate down to 3%.
Contributing to the cautious tone, a Bloomberg report quoted David Rolley, portfolio manager and co-head of global fixed income at Loomis Sayles, who described the tariffs as “the only tax they can hike” during a recent finance event.
Adding to the economic gloom, his colleague Pramila Agrawal projects a 60% chance of a US recession. Meanwhile, Andrea Dicenso, a multi-asset and EM debt strategist at Loomis Sayles, suggested investors are now turning their attention to European and Latin American markets, which she perceives as more stable than the US.
In the midst of this economic turbulence, the impact of these tariffs on global markets, and in particular on Bitcoin, will undoubtedly continue to be closely watched.
